Afren to Have Further Access to Deals in Nigeria, say Analysts

Africa-focused Afren will have further access to deals in Nigeria after "having positioned itself as a partner of choice in the country", according to an analyst report from the firm's 'capital markets meeting' held in London on Tuesday.

The presentation, for analysts and institutional investors, followed up the operations update that Afren issued Monday, when the firm reported an average net working-interest production rate for 2011 of 19,200 barrels of oil equivalent per day (2010: 14,320 boepd). The meeting focused in part on the firm's "success in delivering its strategy of pursuing accretive acquisitions, growing reserves and production", wrote investment bank Westhouse Securities in a research note Wednesday.

Afren was able to provide many tangible examples of success that included the acquisitions of OML 26 in Nigeria and interests in the Kurdistan region of Iraq, as well as rising production figures and early 2012 exploration success at Okoro East in Nigeria. The firm also plans to target over 800 million barrels of oil equivalent of un-risked resources in 2012.

Westhouse pointed out that such a combination of upside and production growth is nothing new in the industry.

"However, Afren's positioning as a vehicle to access a rich opportunity set in Nigeria, as a recognized technical partner of choice, while also looking further afield in west and east Africa, has been its distinguishing feature," said the bank.

"The significant focus at the CMM was, unsurprisingly, on Nigeria, where operations span exploration through to production. Having positioned itself as a partner of choice in the country, we expect that Afren will continue to have access to additional deal flow as the structure of the industry in Nigeria evolves."

Afren's production this year is expected to average between 42,000 and 46,000 boepd, which Westhouse said "appears low" given the firm's 2011 exit rate of more than 55,000 boepd. "However, it represents conservative estimates with regard to production from Ebok, due to unplanned downtime, which we believe makes a surprise to the upside more likely than a miss," it said.

Other production-related points noted by Westhouse include:

Okoro field performance is ahead of expectations

It is too early to draw any conclusions regarding the Ebok field's performance, but plateau production rates are expected to last nine months and decline 15 percent thereafter.

With regard to Kurdistan, the Barda Rash production sharing contract is only expected to contribute 2,000 bopd to the 2012 target.

Following last year's Kurdistan acquisition, Afren has only developed eight percent of its one billion-plus 2P and 2C reserves/resources base.

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